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Bank of Japan saps yen
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June 14, 1999: 10:43 a.m. ET
Central bank pumps $5B into dollars to maintain economic recovery
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LONDON (CNNfn) - Currency traders said the Bank of Japan pumped another $5 billion into the currency markets Monday to damp down the yen and keep the country's fledgling economic recovery on track.
The central bank admitted the intervention -- the second in four days - after heavy dollar buying and yen sales saw the Japanese currency shed 4 cents to reach a peak of 120.85 yen in Asian trading. A technical cap of 122 yen remained in place, said traders.
The yen market remained subdued after the Tokyo close as traders feared that the Bank of Japan had left a series of sell orders with U.S and Japanese banks to head off any speculative moves. "The market doesn't dare to take it either way" said Jesper Dannisboe, currency strategist at ABN-Amro in London.
Analysts said the central bank had clearly targeted 120 yen as a support level and, following a $1 billion sale last Thursday this was the heaviest intervention since it moved to support a 108 yen level in early January.
The currency held just above the benchmark level at 120.19 in midday European trading. .
Tokyo traders said the central bank moved in at 118 yen and followed it all the way up beyond 120 yen.
The successive rounds of intervention Monday were viewed as a clear bid by Japan's financial authorities to sustain the signs of economic recovery that saw GDP jump 1.9 percent in the first quarter, four times the consensus forecast.
The influential vice finance minister for international affairs, Eisuke Sakakibara, made it clear that the Bank would continue to intervene to prevent any unwelcome appreciation. While the bank had rallied in the past against volatility, Monday's moves were interpreted at sustaining recovery. "The Japanese economy isn't ready for a stronger yen," said Dannisboe.
Masaru Hayami, governor of the Bank of Japan, is due to comment on the GDP data Wednesday amid fresh signs that recovery is starting to hold.
A survey by Nomura Securities forecast Japanese corporate profits will climb 13.4 percent in the year ending next March after a 22.3 percent fall in the last financial year, according to new data from the Tokyo stock exchange. However, analysts said earnings would be revised down if the dollar-yen hit 116 yen.
The euro was caught out in the fallout from the dollar buying, falling to $1.0434 from $1.0515, hastened by the lack of any supportive statements at last weekend's meeting of G7 finance ministers. 
-- from staff and wire reports
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Bank of Japan
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